Panama and US sign agreement to broaden regional access to LNG

Panama has signed an agreement with the US Treasury and Energy departments that aims to encourage more private investment to expand the importation and distribution of US LNG in Latin America, as reported by Reuters.

On a visit to Panama last week David Malpass, Treasury Undersecretary for International Affairs, said he hoped the “framework agreement” is the first of several with countries in the region to encourage investment to increase access to cheaper, cleaner energy.

The agreement is part of a Treasury-led initiative called America Crece, incorporating the Spanish word for growth, aimed at boosting US LNG exports, developing Latin American energy resources and downstream demand.

Malpass also visited Panama for the signing and the inauguration of a major new LNG terminal and 381 MW gas-fired power plant in Colon, Panama, run by US power company AES Corp. He said in an interview that new investments encouraged by the agreement will help turn the AES Colon project into an LNG distribution hub, with cargoes imported from the US sent to countries such as Guatemala, Honduras and Nicaragua. These countries and many Caribbean islands now rely largely on oil to generate electricity, with Venezuela a major supplier.

The US$1.15 billion AES facility on Panama’s Caribbean coast – which is expected to begin commercial generating operations on 1 September, and LNG tank distribution operations in 2019 – took in its first US LNG cargo in June.

The Panama agreement allows for the US agencies to help address regulatory and other barriers to investment, Malpass said, which can create opportunities for downstream demand and distribution.

“The framework agreement itself squarely addresses the obstacles that the private sector may be finding in that country,” Malpass said. In the case of Panama, he added, the framework agreement with the US is a signal from Panama to the world that it welcomes investment, in particular private sector funding of projects.

The agreement also aims to encourage increased electrical grid access in rural areas of Panama and Central America and adoption of new technologies such as battery storage to improve reliability and foster economic development, he said.